Prices rise in the capital's smart areas

HOUSE prices in London's most sought-after areas rose in February for the first time in six months.

Estate agency Knight Frank said prices in the prime central London market - from Kensington in the west to Canary Wharf in the east - rose by 0.4% during the month, the first increase since last August and the biggest since last May. Prices were 0.7% higher than a year earlier. An increase in sales activity has boosted buyer confidence, sparking a healthy number of transactions and an end to price falls, Knight Frank said.

Flats in Canary Wharf and Mayfair and houses in St John's Wood represented the bulk of completed deals. About half of the properties sold had been on the market between six and 12 months. Noel Flint, partner in Knight Frank's Sloane Avenue office, said: 'The expected rise in demand on the back of strong City bonuses has failed to materialise, but this has been compensated for by the fact that confidence and activity levels among London buyers has risen.'

Knight Frank expects prices to edge up by 2% this year. Today's report chimes with reports that nationally, the housing market has started the year on a firmer footing.

Rents remained at a standstill in February but were 4.4% higher than a year ago. Some offices, including Canary Wharf, reported a substantial increase in deals.